For youthful English aristocrats in the 18th century, the grand tour was an opportunity to sample the many delights of Europe. But while these prototype backpackers took months or sometimes even years traveling at their leisure, foreign issuers lining up at a European roadshow are probably looking at a week or two at most. Their trips are likely to be less enjoyable than the drinking and philandering popular with the young bucks, but a lot more rewarding – financially speaking, at least.
A well-planned and executed European roadshow presents the chance to meet with a range of diverse but important investors in a reasonably short space of time. Management’s itinerary will depend on the nature of the company, its current investor base and its future targeting plans.
But it would be hard (or foolhardy) to miss out London or Frankfurt. ‘You just have to do London and Frankfurt because there’s so much there,’ says Gunnar Miller, head of European equity research at Allianz Global Investors in Frankfurt. ‘After that you could probably do a rotating schedule of the other important but not as time-efficient places.’ With this in mind, what follows is one plan you might consider for organizing your European roadshow, with experts’ opinions on what each money center offers.
Days one and two: London
Where else to start your journey than Europe’s biggest financial center, with local institutions collectively managing $2.38 tn in equities under management? ‘You get great exposure among the financial community here,’ says Neil Wesley, a fund manager with London-based Morley Fund Management.
Logistically speaking, London is also something of an international transport hub. However, that doesn’t mean that getting around is quick or easy. Whether you arrive at Heathrow or on one of the new all-business-class airlines at Stansted Airport, you’re bound to spend at least 45 minutes traveling into central London.
But transport is likely to be the least of your worries as you try to whittle down which of London’s 2,000 analysts and 3,000 portfolio managers you would like to meet. One clear divide is between the traditional, long-only fund managers, most of whom are based in the City, and the hedge fund community, which is based around Mayfair in the West End.
Hedge funds are growing faster in London than anywhere else in the world and now account for some $225 bn of assets under management (roughly 10 percent of the total equities under management in the capital), according to International Financial Services London.
The days of companies dreading hedge fund interest are now long gone, and most accept that hedge fund managers are little different from other potential investors. ‘Many of the more reputable hedge funds claim they have longer-term horizons than the media gives them credit for,’Wesley comments.
As for traditional buy-side institutions such as Morley, Wesley says larger caps with more liquidity capture the most fund manager attention. But that doesn’t mean that mid caps have nothing to gain here. ‘The mid-cap sector, which is not as well researched, can be interesting, and there might be a few gems you can look to unearth,’Wesley adds.
Day three: Edinburgh
After two days in London, fly up to Edinburgh for a day to escape the bustle and get access to an investment community that is often unfairly overlooked. With $295 bn under management, Edinburgh’s buy side holds more in equities than Zurich institutions ($231 bn) and slightly less than Frankfurt’s buy side ($355 bn).
According to Andrew Milligan, head of global strategy at Standard Life Investments, Edinburgh has a large enough asset management community to attract visiting companies. Because of its distance from London, however, the Scottish capital also has ‘a certain independence and detachment and an ability to take the long-term view,’ he adds.
The fund management universe in Edinburgh is also quite diverse given the city’s size. ‘There are a number of operations like ourselves, Scottish Widows and Axa that are related to large insurance companies, even though we’re all active managers with third-party funds,’ explains Milligan. ‘Then there is a group of smaller operations who are usually very externally orientated, such as Martin Currie and Baillie Gifford. Lastly, there are some more high-performance funds and some investment trusts.’
For those weary of London’s traffic and public transport, Edinburgh is also much easier to get around, with most of the key institutions situated in the relatively compact city center.
Days four and five: Paris
You can now get from central London to the heart of Paris by train in less than three hours, saving you the hassle of airport check-ins and allowing some much-needed time to edit your presentations or catch up on sleep. You’ll most likely need the latter, because the analysts and investors in Paris will expect a more formal approach than their Anglo-Saxon counterparts.
‘Maybe in the UK or the US, the equity story and future expectations are more important,’ says Philippe Risacher, Paris-based European sales director of CapitalBridge, a market intelligence firm. ‘But people are more formal in France. You need to be very clear and precise; figures are important.’
The sell side plays less of a role in Paris so it’s easier to target the buy side directly, according to Risacher. ‘The buyside market is bigger than the sell side,’ he says. ‘On the sell side there are no more than five or six main French players, including Société Générale Securities Services, BNP Paribas and Exane. But on the buy side, there’s Credit Agricole, BNP Paribas, Société Générale Asset Management and Aviva, to name but a few.’
As in London, traffic is a real problem, especially during rush hour. You might find it more convenient to take the Métro. With good planning, you should be able to complete all your main meetings in two days.
Days six and seven: Frankfurt
The best way to plan your roadshow is to measure the potential footprint of each visit in terms of the amount of assets under management you can cover in a given period of time. Miller explains the formula: ‘Zurich’s a pretty small town, which means you can go there for a oneday trip and walk from one place to the other. It’s similar in Frankfurt, but your footprint in Frankfurt in terms of how much assets under management you can visit in one fell swoop is much bigger.’
Allianz positions itself as a truly global asset manager with a focus on fundamentals and no predetermined sector or geographic concentrations. Miller feels that many companies could do more to help investors understand their story. Too often, he claims, issuers rely on a ‘stylized meeting cycle’ of uninspiring CFO and IRO presentations following quarterly reporting.
‘I’d much prefer management to come around and talk about their business off the quarter,’ he comments. ‘The market digests quarterly results in minutes and hours. You don’t have to come round and read us a report that we’ve already read and show us numbers that we’ve already seen.’
Rather than trying to work out the nebulous investment ‘style’ of each city or institution, companies would perhaps be better off spending their time honing their presentation technique. ‘I have a meeting with a large-cap company today and I was a little hard pressed to put together a question list because they’ve just done the numbers,’ says Miller. ‘Most of the number-based questions have already been asked and they haven’t been in the office since they reported, so they don’t have any new input. Increasingly I’m encouraging people to suggest management think outside of the box more.’
